Record Labels Sue Russian Download Site AllofMP3.com in U.S. Court

LOS ANGELES – Several major record labels sued the operator of the Russian music Web site AllofMP3.com, claiming the company has been profiting by selling copies of music without their permission.

The lawsuit was filed Wednesday in federal court in New York against Moscow-based Mediaservices, which owns AllofMP3 and another music site, allTunes.com.

A slate of major record labels, including Arista Records LLC, Warner Bros. Records Inc., Capitol Records Inc. and UMG Recordings Inc., are behind the lawsuit.

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The labels claim Mediaservices' sites sell millions of songs by their artists without paying them "a dime" for the right to do so.

"Defendant's entire business ... amounts to nothing more than a massive infringement of plaintiffs' exclusive rights under the Copyright Act and New York law," according to the lawsuit.

The music companies are seeking a court order against Mediaservices and unspecified compensatory and punitive damages.

A call and an e-mail seeking comment from the Washington D.C.-based spokesman for Mediaservices were not immediately returned.

AllofMP3 typically charges under $1 for an entire album and just cents per track. By contrast, an album at Apple Computer Inc.'s (AAPL) iTunes Music Store and other licensed services typically costs about $10 and a song 99 cents.

Mediaservices has maintained that by paying royalties to a Russian licensing group, the Web site is in compliance with Russian laws.

The music industry contends that the Russian licensing group doesn't have the authority to collect and distribute royalties.

This fall, Visa International and MasterCard Inc. (MA) stopped accepting credit card transactions for purchases made at Mediaservices' sites.

Earlier this year, the British Phonographic Industry filed copyright infringement claims against Mediaservices in Britain on behalf of the major recording companies.